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Real - Trading for a living

  • #1
  • First Post: Sep 2, 2008 1:58am Sep 2, 2008 1:58am
How you define success in Forex
I have seen numerous threads both here and in other forums about how much money you can make in Forex and what is possible with regards to growing your account. While theoretically anything is possible I wanted to bring attention to what the real people do day in day out and what they target and achieve on an annual basis.

The key word here is Annual because to me and I stand to be corrected... Measuring ones success over a month is simply too short a time frame as it doesn't allow a trader to experience all market conditions and seasonal changes.

A prime example is my own... back in 2006 I was trading a small account, using a breakout strategy that really kicked ass for near 4-5 months... I am talking a nice 50-100 pips per day. But Christmas rolled on and in the new year the markets changed... gone were the days of the 150 pip moves on cable and we welcomed a new more choppy trading environment. This is when I had to change my style... but this is for another thread :-)

What I trying to say is in order to know whether you can trade profitably on a long term basis you should really look for a year - 2 years of trading live and even after then you will still learn things.

But the debate I am starting in this thread is what does it really take to allow one to give up full time work and start trading full time.

Lets not talk about this in pip terms as a pip has a different value to every different trading style... 200 pips to me would be a 2% gain on my account, but to others who excercise a somewhat more agressive approach this could mean 20%... do you see what I mean.

So the question's are:

1: What % on an annual basis do you deem to be a good return on your money?

2: What % on an annual basis do you deem to be possible to return on your money?

3: For those out there who are successful what % have you been able to consistently make on an annual basis?

These questions should really help anyone new to the industry to gage what is really possible and save them from the so called gurus who promise to make un realistic amounts in return for their hard earned money.


Since I started this I will answer first :-)

1: Anything above 50% is a good return in my eyes and would make this stuff worth doing...

2: I personally know of someone who returned 171% last year trading conservatively, but I think a realistic target would be 100%

3: This year end I should finish up at about 50%
  • #2
  • Sep 2, 2008 2:44am Sep 2, 2008 2:44am
As an inexperienced trader yet, and most of all, working full-time job, there is little time to trade at day, and at evening here, in Lithuania, London and New York are finishing their work too, so no big moves at home.

So, I specialize in short intraday moves with very tight stoplosses and big amounts, so 200 pips would be 200% for me.
  • #3
  • Sep 2, 2008 2:19pm Sep 2, 2008 2:19pm
[quote=Micardo;2195800]

But the debate I am starting in this thread is what does it really take to allow one to give up full time work and start trading full time.


I don't really understand what you are asking. Percentages of accounts, or as you say as quoted above, what it takes to allow one to be a full time trader.

As you have rightly said, pips mean different things to different accounts. But for what it takes to live from trading, that's a much bigger picture. The most simple answer I can think of is when your income from trading is equal to your outgoings, then you can live from trading. Further to that, when you have one dollar more, you are rich because you have more than you need.

Anyway, that's the basics. It's like asking how long is a string. One answer could be as long as it needs to be? You say time matters, so how long have you had a job for? One day or 50 years? One person may only be just starting, and make enough by trading to live how they want immediately because they don't drink, smoke, go to movies, have sex, are vegetarian and mommy subsidizes their rent. Another may only be able to make enough after 20 years to pay for the luxury power boat and mooring fees down at the yacht club, while living in a one room ghetto dwelling.

I hope you take my humor in a good light as I am not trying to argue. Rather I'm just pointing out that the question you ask may be easy to ask, but just as pips mean something different to each account, so does what it takes to live differ in perception to each person.

Raghu
  • #4
  • Sep 3, 2008 10:16am Sep 3, 2008 10:16am
i would suggest to any trader out there to not quit your job and start trading full time until you can at least make ten percent a year. if you can make ten percent part time, you'll be able to make 15 to 20 percent full time. this is actually pretty good. major hedge funds and brokers would kill for fifteen percent a year. if youre in forex to get rich quick and make 100% in a week, then you shouldnt quit youre job. you will go bankrupt this way. but, if youre in to forex to make a living, i would say 15 to 20, maybe even 30 percent if youre aggressive is perfectly acceptable.

now, as for what it takes to trade full time, money management! the key to being successful isnt to make a ton of money, it's to protect the money that you have. limit losses. thats the big one. people are always looking for the holy grail, you know, trying to find the system that will return 100% a day. the holy grail isnt a system though, its making sure you dont lose more than you have too. i mean, whats the point of making 100% a day when you can lose everything you made, plus the rest of your account, the next day? probably the best way to do this is to give yourself a set amount you can lose a day. pretend you have a fifty K account. you only allow yourself to lose 2 percent a day. so you can only lose 1000 a day. once you lose that 1000, youre done for the day. thats it. as for profits, you can make as much as you want, but you can only lose 1000 a day. this is actually pretty risky. i would advise only 1 percent a day personally.

this is the kind of thinking that will help you to be succsesful. i know it sounds really weird, i mean only 1 percent a day??? thats retarded. i cant make any money if i only risk one percent a day. but think about it. lets say you risk one percent a day, and you make one percent a day. there are about 270 trading days in a year. lets say you lose 70 of those days and win the other 200. if you win one percent a day, thats around 120 percent in a year! lol. this is an extreme example, its unlikely you will only lose 70 days out of the 270, but using this kind of thinking its possible to make a living with forex.

so remember! money management!
  • #5
  • Sep 3, 2008 11:21am Sep 3, 2008 11:21am
Quoting Micardo
Measuring ones success over a month is simply too short a time frame as it doesn't allow a trader to experience all market conditions and seasonal changes.
So true.

At one stage, I'd test a system for a week or two on demo, make some "money", think, "Yay!", run the system in a live account and lose more than I made. I'd go back to demo, earn more "money", go back to live and lose yet more money. Overall, my cumulative money and play money would increase but my bank balance would be slowly shrinking.

There was also an attitude of "how much can I make?" rather than "how much can I lose?".
The market reveals who we really are...
  • #6
  • Sep 3, 2008 1:32pm Sep 3, 2008 1:32pm
Personally, i give myself 150-200% annually, i have been able to put together 165% in the last one year, after i had quit my orientation of the get rich quickly syndrome.
Sometimes ago i could remember i made 308% in a week but i will not tell you what later happened to the account. I now prefer to go slowly, steadily and hope to keep being consistent. I prefer to have something at the end of the year rather than having nothing.
know thy edge and abide by it ! 4 in it shall thou be successful !
  • #7
  • Jan 1, 2009 6:23pm Jan 1, 2009 6:23pm
Quoting Ulterior
As an inexperienced trader yet, and most of all, working full-time job, there is little time to trade at day, and at evening here, .....
As many have mentioned - sometimes the best thing you can do, as a trader, is to enter when you see fit, and then walk away.

I, like many traders, have had much more success with those trades that I don't watch from entry to exit.

Another great thing about having a job is that you can trade longer time frames (4hr, daily, weekly), so you probably have no reason to sit and watch every tick.
  • #8
  • Jan 4, 2009 10:51am Jan 4, 2009 10:51am
My goal - and mind you I'm just starting -
is to grow my account such that 20% annual growth is enought to replace my current 'job' income. Then I'll feel 'comfortable' quitting and listing me occupation as a 'Trader'.

Anything over 20% will be gravy and add to the source fund.
Spinnaker Learning....
  • #9
  • Jan 5, 2009 1:47am Jan 5, 2009 1:47am
I realize that the original post is a few months old now.

The first prerequisite is that your approach (entries and exits) gives you some kind of long-term edge. Otherwise you’ll end up losing - no matter what MM you use, or how disciplined you are - making return irrelevant.

Second, your MM determines to what extent you magnify or diminish your edge. Larger position sizes will increase both annual return, and drawdown, in like proportion. For example,a trader who sizes his positions at 3%, as opposed to 1%, will triple both his return and drawdown (and more than triple the probability of ruin). So the question is not “what return can I expect to make?” but “how much drawdown am I willing to incur, in order to make a given (desired) level of return?”. In general, the bigger your edge (profit factor), the more you can justify increasing your position size.

The third factor is how quickly you turn over your trades. An intraday trader is going to have more opportunity to compound small gains than a position trader. Also, the faster the turnover, the smoother the level of income, e.g. for an intraday trader one loss might mean 6 hours without income; for a longer term trader, one loss might mean two weeks without income. More pros and cons discussed in this thread.

Depending on your approach, you may get long periods of drawdown when conditions don’t suit (e.g. a trend following system encounters prolonged sideways movement), but then a long trend occurs that produces a ‘home run’ trade. This can be typical with methods with a low win rate, but high RR. The trader’s MM needs to factor this into the equation. A high win rate method helps to get around these difficulties. Consistency of income is an important consideration if trading is one's primary source of income.

Finally, I would suggest that everybody’s idea of “success” is not necessarily the same. When I first began my study of trading, I assumed that the ‘Holy Grail’ would be a system that maximized return while minimizing risk. Now I realize that to increase return one has to in some way increase risk, and that the ultimate system is one that balances return, drawdown and consistency of income, in a way that rests comfortably with a trader's temperament, financial objectives, and lifestyle.
_______________________

One interesting thing I’ve noticed:

 

  1. There are folk here who say that the 10%–30% per year that they are making themselves is the best that’s achievable. Many compare their performance to the big funds (who supposedly employ the most highly paid analysts and traders), as evidence that this is also the best that the small retail trader can hope for.

  2. Then there are folk who claim to be averaging anything from 5% to 20% per month (not per year, per month).

Here are some possible conclusions: either
(1) the first group are closer to the truth, and the second group have just been “lucky” thus far; or
(2) the second group have a sharper cutting edge, and/or are more skilled traders, while the first have made the erroneous (and conceited) assumption that their own performance can not be bettered; or
(3) the first group could improve their return by adopting more aggressive MM, but are not willing to embrace the greater drawdown that would ensue; or
(4) the claims of the second group are untrue, or at least exaggerated (it's not too hard to guess a possible motive ).

There are a lot of variables involved, along the lines that I discussed. And of course the funds must operate within certain regulations and constraints. So take your pick!

  • #10
  • Jan 5, 2009 6:18am Jan 5, 2009 6:18am
Hi, David
always enjoy your posts..

How is your trading recently? I suppose you have a winning day today.
Typical day for your system

Regarding to your classification of 3 different types of traders:intraday, swing, position. I think it's more about the approach how traders view the market, then comes to MM factor. If I am not wrong I remember DarkStar had a post about this.
  • #11
  • Jan 5, 2009 11:13am Jan 5, 2009 11:13am
Quoting Zkf
Hi, David
always enjoy your posts..

How is your trading recently? I suppose you have a winning day today.
Typical day for your system

Regarding to your classification of 3 different types of traders:intraday, swing, position. I think it's more about the approach how traders view the market, then comes to MM factor. If I am not wrong I remember DarkStar had a post about this.
Thanks Zkf, I'm having a rest from both trading an programming over the holiday break. But it's back to some serious work next week, and I'll leave the forum alone again.

My path to improvement (as a trader) has been to take proven methods (e.g. James16) and ideas, and meld them into something that is my own. Beyond that, I believe there's no substitute for screen time, to gain 'market knowledge' and experience. One never stops learning, and improving one's trading skills.

Sad to say, DarkStar hasn't posted here for over a year now.

Good luck,
David
  • #12
  • Jan 10, 2009 6:24am Jan 10, 2009 6:24am
Quoting hanover
Thanks Zkf, I'm having a rest from both trading an programming over the holiday break. But it's back to some serious work next week, and I'll leave the forum alone again.

My path to improvement (as a trader) has been to take proven methods (e.g. James16) and ideas, and meld them into something that is my own. Beyond that, I believe there's no substitute for screen time, to gain 'market knowledge' and experience. One never stops learning, and improving one's trading skills.

Sad to say, DarkStar hasn't posted here for over a year now.

Good luck,
David...
Hanover,

I really liked your post. Great advice for us who are getting started within FX. You mentioned the thread by James16 who obviously is running a interesting PA strategy. Would you mind giving some more pointers to other good thread within FF? Thanks.
  • #13
  • Jan 10, 2009 7:18am Jan 10, 2009 7:18am
I can easily make 12% ROI per week.
  • #14
  • Jan 10, 2009 7:56am Jan 10, 2009 7:56am
In my perspective both groups could be right, one comes up to conclusion that there's no holy grail etc and therefore should only play minimal risk/win ratio, where the other group haven't lost their faith yet (not talking about noobies here) and put in some risk, say playing 5%... with the MM applied, even 2to1 win/lose ratio. Do the math, toss some quarters, the chance going broke is quite slim. The only way going broke here is with the help Your unnesesacy emotions involved.

Happy Trading!
  • #15
  • Jan 10, 2009 10:13am Jan 10, 2009 10:13am
Quoting FX__jake
As many have mentioned - sometimes the best thing you can do, as a trader, is to enter when you see fit, and then walk away.

I, like many traders, have had much more success with those trades that I don't watch from entry to exit.

Another great thing about having a job is that you can trade longer time frames (4hr, daily, weekly), so you probably have no reason to sit and watch every tick.

I couldn't agree more with this post. Great one.

I know that my trades always do better when I am not there to mess it up!
  • #16
  • Jan 10, 2009 11:17am Jan 10, 2009 11:17am
Quoting Micardo
How you define success in Forex
I

The key word here is Annual because to me and I stand to be corrected... Measuring ones success over a month is simply too short a time frame as it doesn't allow a trader to experience all market conditions and seasonal changes.
It is true that 1 month cant show everything,

I want to tell my story which is very fresh, I have worked with DEMO for near one year and I devoted my time and energy to learn all about Forex trading.

A month ago I opened a real account but with small cash ( $300) to make myself familiar with the real world of Forex, I have lost $50 for the first day (my account was mini and not micro so the least lot was 0.1) and the n2nd day was the day that FED's rate cut and EUR/USD just jumped and I could overcome my loss and made $100 profit, in 8 days in row I made my account $1250,

I was so cocky and proud so I wanted to make my account to $2000 till last Friday (yesterday) but on last Thursday (11 am) everything started to change, I made my account $1316 and after lunch I entered to a trade with 0.1 lot and suddenly the market moved the opposite ,

I thought it is just a pull back so I put another 0.1 lot but market went its way and I lost $100, I could not stand that so I entered to many trades to recover my loss, I ended up that $900 , on Wednesday I started trading with only one goal to make my account above &1000 but at the end of the day I finished with $800, next day the worse had happened and at the end of that day my account shrank to $500, I promised to myself not to trade till next week but I could not help myself , so I entered to market with $500 and exit with $400.

I could not imagine how I could lose near $1000 in 4 days in row. now I have no confidence nor good sprit for trading, I am afraid to trade and I am not sure that can I repeat that success again or just lose all my account, of course $1000 is nothing but I though that I could be a successful trader and maybe could make a living on Forex, now everything is changed...

Please give my your idea what should I do to take back my courage and be a continuous successful trader, the thinking about how I lost my profit wont leave me not even when I asleep

Sorry to talk your head off
  • #17
  • Jan 10, 2009 11:20am Jan 10, 2009 11:20am
Signing up.

Lenoxer
  • #18
  • Jan 10, 2009 11:35am Jan 10, 2009 11:35am
Quoting Iced Earth
It is true that 1 month cant show everything,

I want to tell my story which is very fresh, I have worked with DEMO for near one year and I devoted my time and energy to learn all about Forex trading.

[size=3][color=black]A month ago I opened a real account but with small cash ( $300) to make myself familiar with the real world of Forex, I have lost $50 for the first day (my account was mini and not micro so the least lot was 0.1) and the n2nd day was the day that FED's rate...





Ok. First thing is that FOREX it is not a fast money. Ok they are but ...

If you have a lot of good strategy and some times wrong. You need to work on you money management !!

This is 50 % of succeed. You need to understand that for now maybe you need only 100$ per day.

LEARN MONEY MANAGEMENT !! That's all... Not a technicall strategy ...
This is Forex ...
  • #19
  • Jan 10, 2009 12:16pm Jan 10, 2009 12:16pm
Iced Earth.

There couldn't be anything easier than realizing that every loss U took would be a winner simply if u went other way.

Back in a day, i bought EA robot which looked pretty promising, tested it on my demo... over 10 pairs it had me lose 700 pips, So that's -700 in just one day! I was jumping from happiness because even if it took me to manually enter every trade against that robot, i would do it and even forget to eat or sleep for the 700 pip sake in one day. So there it is, every loss could be a win, and with money management make that double.
  • #20
  • Jan 10, 2009 12:34pm Jan 10, 2009 12:34pm
Quoting Spartan2008
Ok. First thing is that FOREX it is not a fast money. Ok they are but ...

If you have a lot of good strategy and some times wrong. You need to work on you money management !!

This is 50 % of succeed. You need to understand that for now maybe you need only 100$ per day.

LEARN MONEY MANAGEMENT !! That's all... Not a technicall strategy ...
Dear Spartan2008

Thanks for your concern, yes I think you are right I didnt apply any money management, I have to learn it ASAP do you know any site or file which I can start

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